Microfinance is beyond loans – SEAP boss

Self-reliance Economic Advancement Programme, SEAP, is a non-governmental organisation Microfinance Institution that has successfully placed the Nigerian microfinance sector on the global scheme of things by ranking 37 out of the top 100 global microfinance institutions.

*Deacon Olatunde Oladokun

In this interview with Vanguard at the commissioning of its Ibadan office, the Executive Programme Director, SEAP, Deacon Olatunde Oladokun (JP), talks on SEAP is converting to a microfinance bank and other issues that border on Nigerian microfinance.

What informed the management’s decision to convert to a microfinance bank?

SEAP is an NGO microfinance institution (MFI), but based on our expansion plans and increasing membership of over 300,000 in 119 branches in 17 states, we felt it was time for us to convert into a microfinance bank (MFB) so that our activities would be regulated by the Central Bank of Nigeria (CBN).

Our setting up an office in Ibadan and converting to a national MFB because of our numerous offices in different states of Nigeria will enable us compete at the global level as we have ensured that we have all the needed structures on ground.

Poverty alleviation is our watch word and there are different types of poverty like education, health, and the likes, so we have our hands in other pies as well. Apart from having a bottled water subsidiary, we provide health insurance, through Health Care International, to our members so they can receive basic medical services from hospitals.

We also have the SEAP Health Foundation, which is donation from members to the scheme for them to be able to afford health care services. We also have a special financial service for the widows. Though we advise the widows to go for equipment instead of loans, but we low interest loans which they repay over a longer period of time.

We are also into rural agricultural finance scheme which will assist farmers get their goods to the consumers. We are presently working with fish, pig and poultry farmers.

SEAP is the only Nigerian MFI in the top 100 MFIs globally. What is SEAP doing that other operators need to copy?

Our being the only Nigerian MFI in the top 100 global MFIs is because we are transparent in our operations, expose ourselves to international rating agencies and also train our members on our goals.

We are not perfect and have our share of problems, one of which is lack of funds which hinders our ability to do certain things. But for us to have a future, we need to do things that would attract banks and venture capitalists to invest in us.

Microfinancing is beyond taking loans from MFBs, and this is one area operators are not being straight forward to their customers. We need to preach good savings culture, which is one of the pillars that sustain the sector because it would help build a lasting institution and reduce the frequency at which the institution borrows money too.

The sector’s challenges have to do with the society and when we report cases of default or fraud to the Police, they term it as a civil case and do nothing about it while we lose a lot of money.

We as operators pray that the regulatory bodies would establish a law that makes it a punishable crime for people to borrow money from MFBs without paying.

Though it is almost impossible to divorce default from the microfinance sector, but SEAP has built its structure from the grassroots and members are in charge by mobilising and urging others to pay up. Even when we give individual loans, they still have to go through the groups.

Apart from that, it would be for our mutual benefit for microfinance operators to come together as a body to share ideas and experiences so that we can learn from those that are doing it right and prospering.

We also need to adopt a technology that would curb serial borrowing, which is becoming rampant in the sector as most banks have lost a lot of funds as a result of that.

How does SEAP source for fund, which is a major challenge for MFBs?

Our major source of fund is savings mobilisation but this has affected our ability to reach out to more people as there is a limit to what such fund can do. So we are sourcing for investors and we are talking with Alitheia Capital, Oiko Credit, Ecrofin, and some banks.

But I’m optimistic that the banks would come in once they know that we are regulated, have a strong membership base and is one of the best MFIs in Nigeria.

Presently, we are in partnership with Grameem Foundation, Growing Businesses Foundation, MTN Foundation on rural telephony, the International Finance Corporation (IFC), MTN and Etranzact on mobile savings programme, which is in its pilot phase in Ilorin, Ondo and Oyo states.